Ah, just four days left in this year’s RRSP season, and the scramble is on. I was in three different financial institutions in the past few days, and three buddies all whispered that they HATE this time of the year. It’s all the stress and last minute scrambling. If you HAVE money, but haven’t gotten your savings act together all year – you have a problem. Investing isn’t just dumping some money into whatever in February, just hoping it’ll grown into something by the time a decade or two goes by. Go to yourmoneybook.com and read a couple of stories of the massive return difference between one-shot investing and a monthly contribution. That dollar cost averaging every month will get you more than twice the return.

If you don’t have money – you’ve got a problem, too – it’s just a different problem. The question is whether you should contribute or pay off your debt. I believe you need to have a game plan and a focus. Trying to do a little debt payment, a little savings, etc. doesn’t get it done, or at best it’ll take a lot longer. Take a year or two of no saving or investing and focus on getting to be debt free on everything but the house. Then go back with all that saved money no longer going towards payments and catch up your investments. It’s worth it, because it’ll only be a year or so if you actually get focused and intense.

Here’s another reason to make that worthwhile: Want a guaranteed 27% return on your money totally risk free? Pay off your credit card! All the payments you make are with after-tax money. So in a 30% tax bracket, for example, your 19% credit card is actually a 27.1% rate. Even that 6% car loan is actually 8.6%, and that’s not a bad return, either.

If you’re carrying a bunch of debt, don’t hear this to be permission to never save for retirement. It’s critical that you do. But it’s the second step after getting to be payment free. Nothing gets you a bigger return than NOT making monthly payments and paying out all that interest. Just the savings in that alone will let you immediately redirect them into retirement investments. It’s a half a step back to be able to take two steps forward. Not forever, but for a year or two it can be the best financial decision you’ll ever make.